State Department of Transportation Small Business Programs (2013)

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6 The following chart summarizes the literature review of state DOT small business programs that have been in place for more than five years (Table 1). These are states with sepa- rate existing programs that were developed to increase par- ticipation in contracting for all small businesses, including increasing the use of DBEs in a race-neutral way. Of the nine states that were reviewed and included in the program summary, seven are managed internally by the state DOT Civil Rights Office, whereas the other two have a coop- erative agreement with an outside state certifying agency. Florida and New Hampshire have 100% race-neutral DBE goals. New Hampshire does not have a formal separate small business program as do the other eight states; however, they utilize race-neutral measures to achieve the DBE goal. Additionally, six of the nine state small business programs are supported by the state and apply to state-funded projects only. Florida received a waiver from FHWA to use its small business program on federally funded projects. New Jersey applies its small business program to federally funded proj- ects; however, it only counts DBE participation toward the DBE goal. And, as mentioned earlier, New Hampshire uses race-neutral measures that apply to federal projects. chapter two sUMMARY OF LITERATURE REVIEW

7 State Program Name Legal Background Managing Entity SB Eligibility Benefits Goals Small Business Participation Achievement Additional Notes California (Caltrans) Small Business Enterprise (SBE) Initial SBE legislation enacted February 1998. Executive Order to improve support for small business signed May 2006. Currently applies to state-funded projects only. State of California Department of General Services (also certifying entity) Must be independently owned and operated; Cannot be dominant in its field of operation; Must have its principal office located in California; Must have its owners (or officers in the case of a corporation) domiciled in California; A business with 100 or fewer employees, and average annual gross receipts of $14 million or less over the previous three tax years; or A manufacturer with 100 or fewer employees. 5% bid preference on state solicitations. Cannot exceed $50,000 in any single bid and $100,000 combined preferences. Non-small business primes using SBE subs for at least 25% of net bid price are eligible for 5% bid preference. Prompt Payment Program pays higher interest penalties (0.25% per day) for late payment (>30 days) of construction invoices. Streamlined “SB/DVBE Option” to contract directly (with 2 price quotes) for goods, services, and IT valued between $5,001 and $249,999.99 and public works up to $147,000. Listing in the online Certified Firm and Application Status Search 25% of the state’s overall annual contract dollars. N/A Colorado DOT (CDOT) Emerging Small Business Enterprise (ESBE) Authorized by Colorado State Legislature in 1992. Rules and funding approved by the Colorado Transportation Commission. Guidelines implemented by CDOT Center for Equal Opportunity. Program revamped in 2011. Currently applies to state-funded projects only. CDOT Must be independently owned and operated. Certified by secretary of state to do business in state of Colorado. 50% of SBA size standard in the eligible areas of work (NAICS) Level 1 ESB: construction < $3M averaged revenues and consultants < $1M. All others Level 2 Must perform services in an eligible area of work (work codes) identified by CDOT for construction and consultants Maximum revenue cap of $11.205M ESB Reserved construction and maintenance contracts: Less than $1,000,000 ESB Reserved consultant contracts: Less than $150,000 Financial incentive for Low-Bid awarded contracts: 0.5%–1% of project cost awarded to prime that meets optional target ESB goal percentage on project. Funded through project force accounts. Scoring points for Best Value awarded contracts: Up to 10 points on SOI evaluation for commitment to Optional target participation goals set on select projects. Percentage determined based upon a sliding scale relative to the DBE goal. Ranges from 5%–10%. N/A ESB program is specific to CDOT only and does not apply to other Colorado state agencies or local agencies. Program overhauled in 2011 and many new elements are currently being piloted. Some are still waiting for internal approval. TABLE 1 LITERATURE REVIEW (continued on next page)

8 State Program Name Legal Background Managing Entity SB Eligibility Benefits Goals Small Business Participation Achievement Additional Notes meet optional target ESB participation goal percentage. Compliance enforced with a contractor “grade” that is factored into future project scoring for the prime. Some opportunities available for Level 1 ESB only. Small business support services provided through Colorado SBDC Network. Listing PDF Directory Florida DOT (FDOT) Business Development Initiative (BDI) The Business Development Initiative (BDI) is designed to support the Florida Department of Transportation’s (FDOT) efforts to increase competition, lower prices, and increase support to meet its contracting needs over the next ten years. § 337.025, Florida Statutes provides BDI the authority for innovative contracting and is designed to provide more opportunities and support for small businesses to move from subcontracting and sub consulting to prime contracting and consulting roles. The initial phase of the Business Development Initiative was first FDOT Meet the small business definition as defined by USDOT 49 CFR Part 26.65; with the BDI cap at $22.41 million. Submit a notarized affidavit on a form provided by FDOT attesting to meeting the definition of a small business, if awarded a contract (affidavit and profile sheet). Modified qualification requirement: provide a listing of contracts on which the firm has performed either as a prime or subcontractor or sub consultant (reference sheet) Reserved construction and maintenance contracts: less than $500,000 Performance bond requirements waived for contracts under $250,000. Bid bonds are $500 for contracts over $150,000. Modified qualification process. Bidders on reserved construction and maintenance contracts are not required to be prequalified for contracts over $250,000. Reserved professional services contracts: less than $500,000 for state funded and $100,000 for federal funded. Professional service projects that are reserved require prequalification (no modification). Reduced liability insurance requirements All firms (prime and subs) that participate on the contract must be a small business. 100% race-neutral program To date, 135 contracts (43 Professional Services, 60 Construction, and 32 Maintenance) have been awarded accounting for approximately $60.5 million, which includes subcontracting work for small businesses; 43 more contracts will be offered as BDI contracts in FY12- 13, for a total of 178 contracts. Approximately 132 different small business firms received work with FDOT from the BDI; 69 are DBEs. To date, 27 DBE firms were awarded contracts as a prime contractor. Since the approval from FHWA, the BDI strategies were used on 22 federal March 2009, FDOT received approval from FHWA to use the BDI on federally funded projects, being the first of its kind, nationally to be considered. March 2012, FDOT received approval from FHWA and FTA. TABLE 1 (continued)

9 implemented in fiscal year 2006–07. For the first six months, the pilot program was conducted in District 2. The other districts were added in January 2007. In March 2009 the Department received approval from the FHWA to use the BDI program on federally funded projects. This was the first program of its kind to be considered nationally. funded contracts. Only one contract default The BDI has been successful for small firms to be a prime contractor and grow their business to eventually compete on larger contracts. Also, the BDI has been instrumental in creating much needed jobs. New Hampshire (NHDOT) Race and gender neutral practices NHDOT does not have a separate small business program. However, they have consistently met their DBE goal by implementing race- and gender-neutral practices. NHDOT Same as DBE program DBE firms listed in the state DBE directory. DBEs have access to a list of work items typically subcontracted by Prime Contractors and Consultants. DBEs receive information regarding upcoming NHDOT and municipal projects. FHWA overall DBE goal for 2012– 2014 is 7.75% with 100% race-neutral. N/A NHDOT has the option to implement race- conscious goals on contracts if it is determined during the year that the overall annual goal may not be met by using race-neutral methods exclusively. New Jersey DOT (NJDOT) Emerging Small Business Enterprise (ESBE) In response to a litigation claiming that its DBE program was unconstitutional, NJDOT introduced an ESBE program in 2003–2004. Plaintiffs in the litigation claimed that the DBE goals program impermissibly discriminates against white male-owned NJDOT and NJ Commerce Commission Meets small business size standards according to U.S. SBA and NAICS. Principal is a U.S. citizen or a legal permanent resident of the country. Socially disadvantaged owner with net worth of less than $1.32 million (not including primary residence or ownership equity in the company). Company is a for-profit business. Restricted contracts: Select contracting opportunities reserved for ESBE firms only on federally funded projects. Prime incentive: Prime contractors who use first time DBE/ESBE/SBE receive credit toward their goal percentage equal to the actual dollar amount subcontracted to the DBE/ESBE/SBE. The total project credit limit is 2 percent of the total bid price not to exceed $200,000. Contract-specific ESBE goals for construction projects. Set ESBE goal amount equal to the overall DBE goal for professional services. DBE specific goals are used on contracts if overall goal is not being NJDOT commissioned a study released in January 2011 of all construction and professional services prime contracts between fiscal years 2004 and 2006 with federal funding. The study examined the effect of replacing the DBE program with the ESBE ESBEs are used only on federally funded projects. Either certified DBE or ESBE firms may be used to satisfy ESBE goals. NJ has a similar SBE program that is only used on state-funded projects and is managed by the (continued on next page)

10 State Program Name Legal Background Managing Entity SB Eligibility Benefits Goals Small Business Participation Achievement Additional Notes firms [GEOD v. State of New Jersey, Civil Action No. 01- 2656 (SRC) (D.N.J.)]. Currently applies to federally funded projects only. Same criteria as DBE without race/gender requirement. All DBEs are automatically considered ESBEs. Listing in PDF directory met through ESBE Program. A contract can only have an ESBE goal or a DBE goal. program. For the period analyzed, the DBE share fell, both in terms of the number of contracts and the dollars awarded. The net effect of the ESBE goal on the DBE share was negative 71 percent. NJ Commerce Commission. This is a race- and gender-neutral program requiring 25% of state contract and purchase order dollars to be awarded to SBEs. North Carolina DOT (NCDOT) Small Business Enterprise (SBE) Program Small Professional Service Firm (SBSF) Program The SBE program was created by state statute G.S. 136- 28.10 Highway Fund and Highway Trust Fund Small Project Bidding. Established by Senate Bill 26, § 65 of the 1993 session of the General Assem- bly. The program was approved by the Board of Transportation in December 1993 and established by the NCDOT in March 1994. Currently applies to state-funded projects only. U.S.DOT approved its use on federal projects in June 2012. The SPSF program was implemented in April 2008. Recently received approval by the NC General Assembly to let design project under $250,000. NCDOT Certification with submission of applicable forms. Audit system to review tax information to ensure firms are within the criteria of the program every 2–3 years. Any business that is established for profit. Must be independently owned. Annual gross income of less than $1,500,000, excluding materials. SBE Restricted contracts: For Highway Fund or Highway Trust Fund construction, repair, and maintenance projects of $500,000 or less. Solicit at least 3 informal bids from SBEs and award contracts to the lowest responsible SBE bidder. New federal program will have the same criteria. - NC General Contractor's license may be waived. - Contract payment and performance bonds may be waived. - Listed in online directory. - SBE restricted bids posted online. SBSF Set-asides: Developed to provide subconsulting opportunities for small professional service firms to compete against other comparable subconsulting firms on federal, state, or locally funded projects. If all bidders are equal on the evaluation review, then those qualified firms with proposed SPSF participation will be given priority consideration. No separate goals are set for SBE participation. Between 2004 and 2008, 207 contracts were awarded to small businesses for $144,645,000. Minority and women DBE firms received 20.3% of the contracts. Typical work that may be let under the SBE program includes, but is not limited to, grubbing, clearing, and grading; hauling stone and other materials; erosion control; paint striping; drainage (pipe, curb and gutter, catch basin, etc.); signal installation; landscape planting; fencing and guardrail. The current program also includes Ferries, Rail, Aviation, Bike and Pedestrian and Transit. TABLE 1 (continued)

11 Oregon DOT (ODOT) Emerging Small Business (ESB) Program Small Contracting Program (SCP) The ODOT ESB program grew out of the 1989 legislative session. It began as a pilot program and became a permanent program in 1991. The ESB program was not active during the late 1990s, but in 2000– 01 the program was reactivated. The Oregon ESB program is currently governed by ORS Chapter 200. Oregon State Statutes provide that ODOT will deposit with the state treasurer an amount equal to not more than 1% of each public improvement highway construction contract into the ESB account within 30 days of the contract award. This has been limited to contracts 100 percent financed with State Highway Trust Fund dollars. The Oregon Constitution mandates that the state only spend highway trust funds on highways. Consequently, no ODOT funds can be spent on support services for ESBs ODOT ESB Criteria Have its principal place of business located in Oregon. Have average annual gross receipts over 3 years of: Tier I $1,671,177 for construction firms, $668,471 for other; Tier II $3,342,354 for construction firms, $1,114,118 for other. Tier 1: <20 employees Tier II: <30 employees Be an independent business (not a subsidiary) Be properly licensed and legally registered in this state 12 years max. participation SCP Criteria General construction contractor <$22,410,000 (DBE) and $33,500,000 (MWBE) Specialty construction contractor <$14,000,000 Engineering/Architecture/ Surveying <$4,500,000 Non-construction firms NAICS size standard Set-asides for ESBs: Determination made by ODOT ESB Manager for projects <$100k. No restriction on project type but typically maintenance and capital construction. Moving toward personal services, surveying, consulting, vertical construction. Projects selected based upon geographic and work type diversity, ESB concentration (greater Portland). Other state agencies can use ESB set-aside for projects <$50k. Mentor-Protégé Program by project Training assistance ($300k budget) Waiver for performance and bid bonds SCP Set-asides for Professional Services: Prime SB consultant contracts valued at $74,990 annually or less. Notice to registered firms only (8–10 from list). Preference to firms with no existing ODOT prime contracts. May go to large firms but typically requests sent out to small firms. SCP Set-asides for Construction: Pre-qualified SB prime contracts at $100,000 or less. Notice via RFP with pre-qualification. Limited selection pool (3). Consideration may be given to contractors without existing prime contract. Final selection based on low bid. May go to large firms but The ESB program is authorized to set goals on larger highway and bridge contracts. There are aspirational ESB goals in ODOT advertisements for projects but prime contractors have no contractual obligation to meet these. Not available for ESB Program Between 2007 and 2011 the percentage of total contracts awarded to certified small businesses under SCP has been between 53 and 63 percent. During 2007– 2009, ODOT set aside more than 70 new projects with an estimated value of more than $2.8 million for exclusive bidding by Oregon firms with ESB designation. 2010—$6.4 million of $7 million budget dedicated to creating ESB opportunities. Currently have identified 130 projects. 75% of DBE goal met with race- neutral means. Primarily used on highway maintenance services. The state has a cost share program for maintenance work marketed to district maintenance offices. If a district identifies a contract, the state pays 75% of the cost and the district pays the remaining 25%. Small Contracting Program (SCP) encourages small business participation but it is tailored toward (continued on next page)

12 State Program Name Legal Background Managing Entity SB Eligibility Benefits Goals Small Business Participation Achievement Additional Notes typically requests sent out to small firms. Small business support services provided through Oregon SBDC Network. small projects— any firm can bid if it is pre-qualified for the program. Texas DOT (TxDOT) Small Business Enterprise (SBE) Program Authorized by state law 43 TAC §9.55 adopted July 2000 and updated with repeal and revision of new Subchapter K §9.300 – 9.333 in June 2012. Rules governed by Texas Transportation Commission. Currently applies to state-funded projects only. TxDOT Meet the U.S. Small Business Administration (SBA) size standards At least 51% of the assets and interest and/or classes of stock and equitable securities must be owned by one or more persons who are United States citizens or lawfully admitted permanent resident. Learning, Information, Networking, Collaboration (LINC) Mentor-Protégé Program: TxDOT mentors small and minority-owned businesses interested in doing business with TxDOT. The program focuses on construction, goods and services, information technology, and professional services. DBE/HUB/SBE Industry Liaison Meetings: Quarterly meetings that provide an opportunity for the small and minority businesses development community to provide input and recommendations to TxDOT DBE/HUB/SBE programs. Small Business Briefings: Conducted around the state to provide contract opportunities and information on how to do business with TxDOT and the state in construction, goods and services, information technology, and professional engineering. TxDOT Specialized Workshops: Training on various business development and technical industry topics. Mandatory overall annual SBE participation goals. Individual contract goals may be assigned as necessary to achieve the overall goal. Set SBE goals for federally funded contracts that do not meet the criteria for establishing a DBE goal. N/A The SBE program is applicable to all highway construction and maintenance contracts funded entirely with state and local funds. Professional services are not included in the SBE program unless it is for a federally funded contract that does not meet the criteria for a DBE goal. Virginia DOT (VDOT) Small, Women- owned, and On August 10, 2006, Governor Timothy Kaine signed Virginia Department of Minority 51% independently owned and controlled by one or more individuals who are Small Business Set-Aside Program: Certain Commonwealth statewide Commonwealth overall SWaM goal of 40%. N/A TABLE 1 (continued)

13 Minority- owned Business (SWaM) Program Executive Order No. 33 (2006) focusing on enhancing business opportunities for small, women- and minority-owned (“SWaM”) businesses. The regulations that govern the SWaM Certification Program are found in the Virginia Administrative Code (7 VAC 10-21-10). Applies to state and federally funded projects. Business Enterprise (“DMBE”) U.S. citizens or legal resident aliens, and together with affiliates. 250 or fewer employees or average annual gross receipts of $10 million or less averaged over the previous three years. DBE firms not exceeding SWaM size standards automatically receive SWaM status upon certification. and agency procurements up to $50,000 may be set-aside only for competition between small businesses and large businesses will not be permitted to participate. SB Preference: Certain Commonwealth purchases over $50,000 may be awarded to other than the lowest bidder or most successful offeror, if there is a reasonably priced or reasonably ranked small businesses that is other than the lowest bidder or highest ranking offeror. Small Purchases: Only one small business is required to be solicited for work below $5,000. Listed in SWaM Vendor Directory SWaM firms working on federally funded contracts are not counted toward credit for DBE participation toward attainment of DBE goal. N/A = not available.